Government Shutdown Resource Center

The rhetoric on Capitol Hill has once again raised the distinct but highly undesirable chance that the government may temporarily shut down all but essential operations. Whether that occurs on October 1 or later in the fiscal year, the impacts will be significant. If a shutdown occurs, it is essential that contractors understand the implications on their operations and what actions they can take during and following the shutdown. The information and resources below address a number of these key questions and will be updated and added to as new developments take place.

Current and past guidance for selected agencies is available below, with additional agency guidance available from the OMB Repository of Agency Contingency Plans.

2017 Shutdown Webinar Replay

Shutdown News

8/28/17 - Flowcharting a government shutdown for government contractors
President Trump has indicated that he may be willing to let a governmentwide shutdown happen and Congress has routinely let the clock tick down to just before deadline. The last shutdown (fiscal 2014) lasted 16 days and the longest one lasted 21 days in 1995-96. Rebecca Kehoe of PSC member company CohnReznick discusses how federal contractors can prepare.

8/28/17 - David Berteau: What’s the state of federal contracting?
PSC President & CEO David Berteau joined host Tom Temin on the Federal Drive to discuss the possibility of a government shutdown, sequestration, a debt ceiling breach, and other key issues facing government contractors. 

8/17/17 - As Trump’s relationship with Congress frays, companies worry about a shutdown
One of the largest trade associations representing federal contractors is urging its members to start preparing for a shutdown when Congress returns from its August recess. The Professional Services Council, representing 400 government technology and services companies, sounded the alarm this week. 

4/10/2017 - David Berteau on Dealing with Uncertainty
David Berteau joined host Francis Rose on Government Matters Monday to discuss areas of uncertainty for government contractors, including federal budgets, security clearance backlogs, and political leadership vacancies. David noted challenges and opportunities in each of these areas that will better enable contractors to help agencies accomplish their missions.

10/30/15
- In a report released October 30 on "2013 Sequestration and Shutdown," GAO found that selected agencies—the Departments of Commerce, Energy, and State, and the National Aeronautics and Space Administration (NASA)—generally managed and tracked unobligated balances to ensure the effective use of program resources in the eight reviewed accounts. GAO is recommending that Energy finalize and implement a strategy and that State finalize its strategy and continue efforts to ensure more effective management of unobligated balances in the WAPA CROM account and CBSP within the D&CP account, respectively. Energy and State concurred with GAO’s recommendations. Commerce, Energy, and State provided technical comments which GAO incorporated; NASA had no comments.

9/25/15 - On September 25, the Office of Management and Budget posted online updated contingency plans for numerous federal departments and agencies in the event of a government shutdown. Included among the updates was contingency planning guidance from the Department of Defense outlining which civilian employees still need to report to work in the event of a shutdown.

2/27/15 - On February 27, the Department of Homeland Security released guidance outlining procedures for a potential lapse in appropriations. The 46-page document contains definitions of exempt and essential functions as well as procedures to be follow to ensure an orderly shutdown, including guidance on in which cases contract performance should be suspended. 
 
10/15/14 - GAO Report 15-86 (October 15, 2014) “2013 Government Shutdown: Three Departments Reported Varying Degrees of Impacts on Operations, Grants, and Contracts.” The 2013 shutdown impacted some operations and services at the three departments that GAO reviewed: Energy (DOE), Health and Human Services (HHS), and Transportation (DOT). GAO recommends that OMB instruct  agencies to document lessons learned in planning for and implementing a shutdown, as well as resuming activities following a shutdown should a funding gap longer than five days occur in the future. 

11/7/13 - The Office of Management and Budget (OMB) issued a report on the impact and costs of the October 2013 Federal Government shutdown. Among other impact, the report noted that the shutdown resulted in over 10,000 stop work orders for contracts and numerous temporary layoffs among the federal contractor community. As OMB noted, Federal acquisition regulations allow contractors to request equitable adjustments for certain cost impacts associated with having to put operations on hold (e.g., costs of maintaining idle facilities, unabsorbed overhead) and that there could be thousands of requests from contractors seeking to be reimbursed for costs in¬curred as a result of these suspensions. In addition, the government will owe interest on billions of dollars of payments not made on time during the shutdown, ranging from IRS refunds to contractor payments, OMB said.

11/1/13 - On November 1, 2013, the Congressional Research Service released a report titled The FY2014 Government Shutdown: Economic Effects. The report concludes that the government shutdown had both direct and indirect effects on economic growth. It directly reduced GDP because government spending is a component of GDP. Assuming the funding levels enacted on October 17 were the same as the funding levels that would have been enacted on September 30 had a shutdown not occurred, some spending would be delayed but not permanently reduced. An indirect effect is the reduction in private consumption or business investment because of a decline in consumer confidence, which surveys reported in October. Some indirect effects may be attributable to the debt limit impasse, however, which occurred at the same time as the shutdown. It will be months before all of the relevant data are released to allow observation of how the shutdown affected the economy.

10/17/13 - Congress passed a Continuing Resolution (CR) late last night, which the president signed into law early this morning, funding the government through January 15, 2014 and ending the government shutdown. The CR also suspends enforcement of the debt limit until February 7, 2014. Following the passage of the CR, OMB Director Sylvia Burwell issued a memo to federal departments and agencies directing them to "reopen offices in a prompt and orderly manner."

10/9/13 - The DoD director of Defense Procurement and Acquisition Policy (DPAP) issued a class deviation from the FAR to obtain supplies and services necessary to carry out or support excepted activities in advance of the availability of fiscal year 2014 appropriations. The deviation does not apply to actions using existing appropriations or authorize actions under the “Pay Our Military Act.”

10/8/13 - DFAS Director Teresa McKay issued a memo to DFAS employees regarding the status of the DFAS workforce and their plan to process valid invoices. For DoD contractors, the 9/30  enactment of the “Pay Our Military Act” and Secretary Hagel’s 10/5 directive permitted the recall of key DCMA and DCAA staff necessary to “approve” invoices for payment.

10/7/13 - CRS has released a report titled "Government Shutdown: Operations of the Department of Defense During a Lapse in Appropriations."

10/5/13 - Secretary of Defense Chuck Hagel issued guidance to begin recalling many of the department's furloughed civilian employees as part of its implementation of the "Pay Our Military Act" (POMA). While not a blanket recall, Sec. Hagel directs DoD to eliminate furloughs for employees who provide support to the Armed Forces by contributing to the "morale, well-being, capabilities and readiness of service members." In its transmittal to PSC for dissemination to our members, DoD noted that this includes all DCMA and DCAA employees, who will be directed to return to work on Monday.
 
10/3/13 – According to the Defense Finance and Accounting Service (DFAS) in Columbus, Ohio, they anticipate being fully staffed and able to process valid vendor invoices through approximately October 10 if the current lapse of appropriations should continue that long. However, beginning immediately, they anticipates slowdowns due to government customers not being available to address pre-validation issues or provide the required receipt certifications. 

It is thus likely that contractors will see invoices "stuck" in pre-validation or in Wide Area Workflow (WAWF) waiting those predicate actions. While DFAS will endeavor to keep the pipeline of valid invoices cleared, all DFAS overtime has been eliminated to help conserve payroll cash reserves. Of course, if the shutdown continues or if the debt ceiling constrains available federal funds, the situation could deteriorate significantly and with little advance notice. 
 
10/1/13 – With the expiration of appropriations late last night and a Continuing Resolution yet to be enacted, the Office of Management and Budget issued a September 30 memo directing federal agencies to “execute plans for an orderly shutdown due to the absence of appropriations.”

Also on September 30, the president signed into law HR 3210, the “Pay our Military Act.” The law, effective October 1, provides appropriations for pay and allowances for active and guard forces in DoD and the Coast Guard who “perform active service” during the period covered by the law. The law also provides pay and allowances for civilian employees of either DoD (for the military) or Homeland Security (for the Coast Guard) for whom the appropriate secretary determines are providing support to the members of the Armed Forces as well as pay and allowances for DoD or DHS contractors whom the Secretary concerned determines are providing support to members of the Armed Forces. The law remains in effect until January 1, 2015 or the enactment of an appropriations bill that provides or rejects such funding. The full text of the bill is below. Detailed implementation guidance, including determinations of which contracts and contractors will be covered, are still required by DoD and DHS. We will follow the implementation of this Act closely.

Resources

Guidance & Reports